Natural Gas Price Fundamental Daily Forecast – Sustained Move Over $2.274 Supports Upside Bias

The back and forth trade in natural gas is continuing on Friday with prices down shortly before the regular session opening. This follows a surge on Thursday that was fueled by a government report that came in lower than expected, while breaking the streak of triple-digit storage builds. Prices were also underpinned by forecasts that continue to trend higher, but gains were limited by mixed cash market prices.

At 11:50 GMT, August Comex gold is trading $2.302, down $0.022 or -0.95%.

U.S. Energy Information Administration Weekly Storage Report

On Thursday, the EIA reported a 98 Bcf injection into storage inventories for the week-ending June 21. The build came within expectations, but fell well below the 104 Bcf consensus. Besides being the lightest injection of the summer so far, it also broke a streak of seven consecutive triple-digit injections. The build was also above last year’s 71 Bcf injection and the five-year 70 Bcf average.

Working gas in storage was 2,301 Bcf as of Friday, June 21, 2019, according to EIA estimates. This represents a net increase of 98 Bcf from the previous week. Stocks were 236 Bcf higher than last year at this time and 171 Bcf below the five-year average of 2.472 Bcf. At 2,301 Bcf, total working gas is within the five year historical range.

Short-Term Weather Outlook

According to NatGasWeather for June 27 to July 3, “Weather systems will bring showers and thunderstorms across the northern US although continuing to get warmer with highs of upper 80s to lower 90s from Chicago to NYC. The southern half of the US will be hot with highs of 90s over Texas, the South & Southeast, with 100s over the Southwest, although still with pockets of showers and local cooling. Overall, demand will increase to moderate-high as highs of upper 80s and 90s gain in coverage.”

Spot Gas Prices Lower

Cash prices across the United States were mostly lower this week, although the declines were below average with heat spread across the country.

Daily Forecast

The price action suggests a slight upside bias may be developing. At this time, I think it’s safe to say the market is being underpinned by weak short-covering and some aggressive counter-trend buying.

The short-term range is $2.413 to $2.134. Its 50% level at $2.274 has been controlling the direction of the market all week. The close over this level on Thursday and holding above it today is helping to generate an upside bias.

If this move is able to generate enough upside momentum then look for the rally to possibly extend into the main top at $2.413. Taking out this level will change the short-term trend to up. This could trigger a further rally into the retracement zone at $2.440 to $2.512.